Parking deals are option to fill vacant office space
Parking incentives could be a key part of strategies to fill nearly 1.5 million square feet of vacant office space in downtown Des Moines, civic leaders say.
"We need to be real aggressive on the matter," City Manager Rick Clark said. "It's a shared responsibility by the city, building owners and business leaders. We can help, and we're willing to help."
City officials are exploring a parking program that could be marketed to businesses looking to make their next address downtown.
Currently, about 750,000 square feet of vacant office space exists downtown. That figure stands to double once insurance companies Aviva and Wellmark relocate in the coming months.
Wellmark's move presents challenges on both the office space front and for the city's public parking system, which has already been hit with a roughly $1.5 million revenue shortfall in recent months.
Wellmark has had a license for 1,000 spaces in city garages. There will be private parking for employees when Wellmark's $194 million headquarters opens later this year on Grand Avenue between 11th and 14th streets.
City officials are searching for ways to overcome the parking system's revenue shortfall without raising rates. The incentive idea aims to overcome vacancy problems in the parking system and downtown office buildings.
An incentive package the city negotiated with Aviva offers a blueprint for future deals.
Recently, City Council members unanimously supported an agreement that will keep an Aviva Investors North America division in downtown Des Moines and add 100 high-paying jobs.
The city will pay for the company's employee parking for the next seven years under the deal. Aviva employees can park for free in city-owned garages or be reimbursed for up to about $1.3 million in parking expenses at privately owned garages.
Money from the downtown tax increment finance district will pay for the Aviva incentives.
In return, Aviva Investors North America, which now employs 190 people, would move from the Hub Tower to a larger space in the Davis Brown Tower, 215 10th St., and add 100 employees over the next seven years. The employees would be paid an average starting salary of about $90,000.
Similar deals can and should be struck with other companies to slowly but surely reoccupy downtown office space, City Councilwoman Christine Hensley said.
"It makes it more attractive for business executives as they're making decisions on where to locate," she said. "Clearly it's going to take a while. Especially if you're looking at moving people in who are taking 25,000 to 50,000 square feet at a time."
Such efforts will also address vacancy issues in the parking system, she said.
Additionally, city leaders will try to cut overhead and delay maintenance projects while they wait for parking business to rebound.
Parking revenues for the current year have declined 8 percent compared with the 2009 fiscal year. They are 16 percent below projections.
City officials projected that a rate increase that took effect in January 2009 would boost revenues to roughly $10.5 million. Revenues from city garages, meters and parking lots are expected to hit about $9 million.
A $1.2 million increase in tax increment finance support in the parking system is planned during the 2011 fiscal year to help make up for the shortfall.
The city has eight parking garages with 7,415 stalls combined, five parking lots with 796 spaces, and 3,800 parking meters.
Since 2002, the city has seen increased competition from private parking garages that will have about 11,300 spaces by the end of this year.
Glenn Lyons, the new president and CEO of the Downtown Community Alliance, agrees there is potential for the city to make deals that address vacancies in the public parking system and office buildings.
The alliance works on a range of economic development issues downtown. Its leaders, along with various city and business officials, recently formed a group that's studying the office vacancy issue.
Lyons said buildings built in recent decades are probably most competitive in the office space market because they won't require as much reinvestment from their owners to stay attractive.
Older buildings generally require a lot more work, Lyons said.
"If they go vacant, there's a fair chance they won't be leased any time soon," he said. "So what we have to do is find ways to save the ones that are worth saving."
City officials are exploring a parking program that could be marketed to businesses looking to make their next address downtown.
Currently, about 750,000 square feet of vacant office space exists downtown. That figure stands to double once insurance companies Aviva and Wellmark relocate in the coming months.
Wellmark's move presents challenges on both the office space front and for the city's public parking system, which has already been hit with a roughly $1.5 million revenue shortfall in recent months.
Wellmark has had a license for 1,000 spaces in city garages. There will be private parking for employees when Wellmark's $194 million headquarters opens later this year on Grand Avenue between 11th and 14th streets.
City officials are searching for ways to overcome the parking system's revenue shortfall without raising rates. The incentive idea aims to overcome vacancy problems in the parking system and downtown office buildings.
An incentive package the city negotiated with Aviva offers a blueprint for future deals.
Recently, City Council members unanimously supported an agreement that will keep an Aviva Investors North America division in downtown Des Moines and add 100 high-paying jobs.
The city will pay for the company's employee parking for the next seven years under the deal. Aviva employees can park for free in city-owned garages or be reimbursed for up to about $1.3 million in parking expenses at privately owned garages.
Money from the downtown tax increment finance district will pay for the Aviva incentives.
In return, Aviva Investors North America, which now employs 190 people, would move from the Hub Tower to a larger space in the Davis Brown Tower, 215 10th St., and add 100 employees over the next seven years. The employees would be paid an average starting salary of about $90,000.
Similar deals can and should be struck with other companies to slowly but surely reoccupy downtown office space, City Councilwoman Christine Hensley said.
"It makes it more attractive for business executives as they're making decisions on where to locate," she said. "Clearly it's going to take a while. Especially if you're looking at moving people in who are taking 25,000 to 50,000 square feet at a time."
Such efforts will also address vacancy issues in the parking system, she said.
Additionally, city leaders will try to cut overhead and delay maintenance projects while they wait for parking business to rebound.
Parking revenues for the current year have declined 8 percent compared with the 2009 fiscal year. They are 16 percent below projections.
City officials projected that a rate increase that took effect in January 2009 would boost revenues to roughly $10.5 million. Revenues from city garages, meters and parking lots are expected to hit about $9 million.
A $1.2 million increase in tax increment finance support in the parking system is planned during the 2011 fiscal year to help make up for the shortfall.
The city has eight parking garages with 7,415 stalls combined, five parking lots with 796 spaces, and 3,800 parking meters.
Since 2002, the city has seen increased competition from private parking garages that will have about 11,300 spaces by the end of this year.
Glenn Lyons, the new president and CEO of the Downtown Community Alliance, agrees there is potential for the city to make deals that address vacancies in the public parking system and office buildings.
The alliance works on a range of economic development issues downtown. Its leaders, along with various city and business officials, recently formed a group that's studying the office vacancy issue.
Lyons said buildings built in recent decades are probably most competitive in the office space market because they won't require as much reinvestment from their owners to stay attractive.
Older buildings generally require a lot more work, Lyons said.
"If they go vacant, there's a fair chance they won't be leased any time soon," he said. "So what we have to do is find ways to save the ones that are worth saving."
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